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Friday, Aug. 8, 2008

Revitalizing Grand Avenue

Can downtown development redeem the historic mall?

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The last decade has been brutal for Milwaukee’s malls, which one by one have shut down, supplanted by bigger new shopping centers in neighboring suburbs. With the closures of Capitol Court, Northridge and Southgate, Grand Avenue is now the city’s last indoor mall, and it’s facing difficult times.

Built in the early ’80s as part of a concerted effort to bring retail business back downtown at a time when shoppers were abandoning the city, Grand Avenue was once filled to near capacity with unique, upscale shops. By the ’90s, though, business was lagging, and vacancies began mounting.

Thanks to a $30 million makeover years ago, the mall looks as beautiful as ever. Polished and modern, with a bright, open layout that plays off the building’s historic architecture, the mall is a far cry from the darkly lit, threatening corridors of Capitol Court in its final years. But its halls are riddled with empty storefronts, particularly in the eastern wing, which never recovered from losing its anchor store, Marshall Field’s, a decade ago. The western wing, which benefits from a high-traffic food court, is more lively, but many of its tenants are urban-clothing stores and small knickknack vendors, a far cry from the high-end retailers the mall desires.

Mall staples like The Gap, Banana Republic and Sam Goody left years ago, and in the coming weeks Grand Avenue will lose another of its major anchors, Linens ’n Things, which is currently liquidating the last of its inven tory. That store will leave vacant an important 30,000 square feet on the mall’s main level, where windows over look Wisconsin Avenue, one of downtown’s busiest streets.

Sad State of Retail
When Ashkenazy Acquisition Corp., a New York investment firm, purchased the Grand Avenue mall from Northwestern Mutual in 2005, they renamed it The Shops of Grand Avenue, perhaps to skirt the stigma of urban malls. Ashkenazy has remained mostly mum on its concrete plans for the shopping center, much to the ire of some in the business community who’d prefer to see a more visible push to woo new tenants.

The Linens ’n Things closure is an example of the challenges facing Ashkenazy. That store is shutting down after the corporation filed for bankruptcy and announced the closure of more than 100 locations. With consumers cutting back spending amid talk of a recession, large national retailers that might consider opening a Grand Avenue branch are scaling back their expansion plans. Local business experts expect the economy to remain skittish through the near future, and believe that retail will be hit especially hard. That bodes poorly for Grand Avenue in the short term, but Erica Anderson, director of marketing and specialty leasing for the shopping center, said that Ashkenazy is committed to a long-term strategy for its investment.

“We have our floor plans mapped out,” Anderson said. “We’re well aware of what spaces need to get filled, and we would like to do that in a timely fashion. We have taken active steps toward making The Shops what we want it to be.” Anderson said that Grand Avenue is in talks with another major retailer to fill Linens’ vacancy, but cannot disclose specifics because “the ink isn’t dry yet.” She added that she fields calls from local businesses interested in the shopping center every day, and that prospective tenants are screened accordingly.

“We want to make sure we keep a diverse mix of products and services in our center,” she said. Alderman Robert Bauman, whose Fourth District includes Grand Avenue, said he has faith in the mall’s management. “They seem to be perfectly capable of running the day to-day operations,” he said. “The space is clean and well maintained.

Would I like to see more stores? Sure. And eventually there will be, there’s no doubt about it. But there’s going to be a lag time.”

Growth Potential

Despite retail woes, the deck isn’t entirely stacked against The Shops of Grand Avenue. What was once one of the center’s biggest disadvantages—its central, downtown location—could become one of its biggest assets as a new breed of workers and retirees move downtown, according to City Development Commissioner Rocky Marcoux.

“Retail follows residential,” Marcoux said. “It’s an adage, but it’s true. Grand Avenue got ahead of itself, getting in front of a residential environment that wasn’t that strong. Now fast-forward to 2008, with over 2,000 condos being built in the last 15 years. We’re seeing 18,000 people living downtown now, and an influx of people into the Third Ward and Fifth Ward.” Marcoux says these new condo residents provide a whole new market for Grand Avenue, which has long catered primarily to downtown workers, tourists and convention-goers.

“The average consumer has been strapped, but the person living downtown is not so much worried about putting $4 gas into the tank,” Marcoux said. “They have money to spend on retail. Sixty-four percent of the condo market is the baby boomers moving back. They’re empty-nesters. They love the ambiance of down town, and like being able to walk to restaurants, but the one thing that is missing is a concentration of both high-level and everyday retail. They’re looking for more things they can buy without having to travel too far.

“One of the complaints you always hear about Grand Avenue is, ‘It doesn’t have this store, it doesn’t have that store, therefore it’s dead,’” Marcoux adds. “That’s nonsense. The fact that these stores aren’t in Grand Avenue yet presents a real opportunity to expand.”

Mike Mervis of the real estate company Zilber Ltd. agrees that developments downtown leave Grand Avenue well positioned.

“Right now downtown Milwaukee may be temporarily overbuilt, but there’s so many people who have moved downtown around the river and nearby that when the overall market starts to improve, downtown will be one of the first places to get hot,” Mervis said. “Over time we’re going to see more and more people moving downtown, which means at some point retail here is going to be successful, even if some businesses may be going through a hard time now.”

Promising Developments

Marcoux expects neighboring developments to drive traffic to Grand Avenue. Already, he said, Grand Avenue benefits from the ASQ Center to the east. That building includes a highly visible Borders bookstore that overlooks Wisconsin Avenue.

The city is hoping to add another major anchor to Grand Avenue’s west, at Fourth Street and Wisconsin Avenue. The Charlotte, N.C.-based Ghazi Co. plans to turn the existing parking lot into a 31-story entertainment center that could include a hotel, theater and bowling alley. The city is supportive of the development, and plans to sell Ghazi the land for $1. “We are actively negotiating with Ghazi as we speak about moving that project forward,” Marcoux said. “The issues now on the table are not insurmountable at all.” Similarly, the city is also in active negotiations to bring a long-rumored down town Target to Milwaukee. Property just south of Grand Avenue is considered a possible location.

Marcoux said that Mayor Tom Barrett’s transit plan would also—literally—drive traffic to Grand Avenue. Barrett’s plan would create a streetcar loop that circles downtown, with stops at Grand Avenue.

Combined with the migration of condo residents back into the city, these developments could refashion downtown as a specialized retail destination.

“I’m definitely bullish on downtown, bullish on Grand Avenue and bullish on the city in general,” Marcoux said.

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